SHANGHAI (Reuters) - The Chinese stock market posted its biggest one-day drop in more than a month on Wednesday, with a tumble in small-cap shares offsetting gains in infrastructure and banking stocks.
A slew of weak economic data this week has also soured investor sentiment. On Wednesday, China reported economic growth slowed to a six-year low.
The economy grew 7 perc ent in the January-March quarter from a year earlier - the worst showing since the depths of the global financial crisis, data showed, highlighting the need for further monetary easing.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 1.3 per cent, to 4,380.5, while the Shanghai Composite Index dropped 1.2 per cent, to 4,084.16 points. "Valuation of China's blue chips is still reasonable...but most of China's small-cap companies are expensive," said Huang Ruiqing, fund manager at Bosera Asset Management Co.
Shenzhen's start-up board ChiNext and the SME board for small-and-medium-sized enterprises tumbled 4.7 per cent and 3.7 per cent, respectively, amid concerns over their lofty valuations.
But banks, infrastructure and transportation stocks jumped, as investors are betting such companies would benefit from China's ambitious"Modern Silk Road" scheme that will see huge infrastructure investment around Asia.